China’s inflation accelerated in January as prices excluding food rose the most in at least six years, bolstering the case for more interest-rate increases to tame overheating risks in the fastest-growing major economy.

Consumer prices rose 4.9 percent from a year earlier after a 4.6 percent December gain, the statistics bureau said on its website today. A separate central bank report showed banks signed 1.04 trillion yuan ($158 billion) in new loans, less than forecast while still the third-highest January total.

“Inflationary pressures haven’t abated and China has already entered into an era of structural inflation,” said Liu Li-gang, an Australia & New Zealand Banking Group economist in Hong Kong. He sees “more monetary policy tightening ahead.”

The acceleration in inflation reflects rising rents, a 48 percent surge in money supply in two years and increasing domestic demand in the nation that’s replaced Japan as the world’s second-biggest economy. Policy makers may front-load monetary-policy tightening in the first half of the year as inflation remains elevated, according to JPMorgan Chase & Co. and Morgan Stanley.

The yuan gained 0.1 percent to 6.5897 per dollar as of 3:51 p.m. in Shanghai, while the benchmark Shanghai Composite Index closed little changed.

Money Supply

January lending of more than double December’s level sustained a pattern of Chinese banks extending more credit at the start of each year. At the same time, the latest amount was 160 billion yuan less than the median estimate in a Bloomberg News survey of analysts.

A smaller gain in M2, the broadest measure of money supply, added to the signs that central bank tightening is starting to take effect after record lending drove China’s economic recovery. M2 climbed 17.2 percent, less than a 19 percent median forecast and a 19.7 percent gain in December.

In the inflation data, producer-prices climbed 6.6 percent, the most in eight months. Consumer-price inflation has exceeded the government’s 2011 target of 4 percent for four months.

Economists had anticipated a 5.4 percent gain in the consumer price index, according to the median of 27 estimates in a Bloomberg News survey. Alterations to the CPI’s components that took effect last month boosted the rate by 0.024 percentage point, the statistics bureau said.

Food Costs

“The driver of the below-consensus reading is the smaller- than-expected increase in food prices,” said Lu Ting, a Hong Kong-based economist with Bank of America Merrill Lynch.

Asian economies, with rising food costs and inflows of capital driving inflation, may need to raise interest rates further to limit the risk of overheating and prevent a “hard landing,” International Monetary Fund Managing Director Dominique Strauss-Kahn said Feb. 1. India’s benchmark wholesale- price index rose 8.23 percent in January, Indonesia’s inflation is 7 percent and South Korea’s is 4.1 percent, the latest government data show.

The People’s Bank of China has raised its benchmark one- year lending and deposit rates by a quarter percentage point three times since mid-October and also ratcheted up banks’ reserve requirements.

‘Worrying Sign’

China’s consumer prices jumped 1 percent in January from December, the third-biggest monthly increase in almost a year, the statistics bureau said today.

“The spillover of price pressures throughout the inflation basket should be a worrying sign for the People’s Bank of China and as a result we expect the recent fast pace of monetary tightening to continue,” said Dariusz Kowalczyk, an economist with Credit Agricole CIB in Hong Kong.

Companies from Baoshan Iron & Steel Co. to Starbucks Corp. and McDonald’s Corp. have raised prices. U.S. fast food chain McDonald’s may increase the cost of some meals again in the second half, Tim Fenton, president for Asia, the Middle East and Africa said in a Bloomberg TV interview yesterday.

China’s one-year deposit rate, which now stands at 3 percent, has lagged behind inflation for about a year. The government aims to keep consumer price gains within 4 percent this year, state television reported Dec. 14, citing the National Development and Reform Commission.

Reserve Requirements

The central bank last month asked lenders to set aside more money as reserves for a seventh time since the beginning of last year and the government has also intensified a crackdown on property speculation.

China became the world’s No. 2 economy after Japan’s gross domestic product fell an annualized 1.1 percent in the fourth quarter, the Japanese government said yesterday. The International Monetary Fund estimates the Chinese economy will grow 9.6 percent this year, six times faster than Japan.

Under revised CPI weightings, the component for residence- related charges, which include rent and utility costs, was increased by 4.22 percentage points, the statistics bureau said. Other categories got smaller weightings, with food declining by 2.21 percentage points, the agency said.

Inflation Driver

It didn’t give the exact make-up of the index. Food previously accounted for a third of the basket of goods and was the main driver of inflation last year. Residence-related costs jumped 6.8 percent in January from a year earlier, the most since August 2008, today’s data show.

The statistics bureau also revised the calculation of the components of the producer-price index, adding about 2000 products to the basket and adjusting the weightings. The change reduced January’s yearly producer-price inflation by 0.05 percentage points, the bureau said, without disclosing a breakdown of the basket.

China may increase retail gasoline and diesel costs as soon as this week to reflect higher international crude prices, Shanghai Daily reported Feb. 11, citing consulting company C1 Energy. The world’s largest rice consumer last week increased the minimum purchasing prices for the 2011 crop by as much as 22 percent to boost stockpiles and increase production.